"I have a great paying job! I earn $40,000 a year, spend $42,000..."
Does that sound familiar? Are you searching the Internet to get a quick loan online? Are you looking for a paycheck cash advance? On the hunt for that personal loan online? One thing is for sure, there are no shortage of companies willing to help you out in your quest for more credit.
If you ask some of the wealthiest people if they borrow money, they will tell you "Yes, of course!"
If you ask people struggling to make their income last until the end of the month, they will tell you "Yes, of course!"
So what is the difference? Robert Kiyosaki identifies the first as good debt and the second as bad debt.
Good debt is debt that generates income. Bad debt is debt that goes to buy stuff.
"But most of my debt is my mortgage and my car loan! Isn't that good debt? It increases my assets and improves my net worth!"
Probably not. Borrowing to buy your house, your car and your boat is just an expense. These are non-productive assets that do not generate income for you. If you use these item as security to borrow money to generate income, then that would be good debt. Good debt is debt that someone else pays for you.
When you have bad debt it is like working for the lender. Every month your hard work goes to paying that person.
Get yourself out of the bad debt cycle. No more unsecured personal loans to buy home entertainment systems! No more trips to the Internet Casino, gambling on striking it rich on your credit card!
With this knowledge you can start to plan your financial future with a goal of replacing your bad debt with good debt. Find productive assets and leverage your cash with good debt!
Visit the No Limit Success Bookstore to buy Robert Kiyosaki's Cashflow Quadrant book and learn more!
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Paul
Maclauchlan
"Financial Freedom is when your passive income equals
or exceeds your desired lifestyle." - Casey Combden
Last change: Fri Nov 27 11:28:23 EST 2009
All material Copyright © 1994, 2009 Paul Maclauchlan
